Rebecca MacKinnon's postings about work, reading, and ideas from 2004-2011.

November 07, 2007

Yahoo! execs called moral "pygmies" in Congress

On Tuesday, Yahoo's Jerry Yang and senior counsel Michael Callahan got yelled at in congress generally for their role in the jailing of journalist Shi Tao, and specifically for failing to give complete information in their 2006 testimony about the case. The LATimes coverage of the hearing includes embedded AP video of highlights from the grilling, including Jerry Yang's apology and Michael Callahan's regretful and apologetic explanation. Also see the Wall Street Journal's very thorough account. The House Foreign Affairs Commitee website has full transcripts from Congressman Tom Lantos, Yang (PDF) and Callahan (PDF), plus a link to the webcast. All the negative attention has not been without cost to Yahoo. Its share price went down 5% on hearing day, and some reported that the hearing eclipsed the IPO of Alibaba, which now operates Yahoo's web services in China.

Last week in advance of the congressional grilling I wrote a an analysis of the whole situation. It does seem plausible that Yahoo simply messed up their internal communications, rather than deliberately lied about exactly what information they had on the Beijing Public Security information order for the user account which turned out to belong to Shi Tao. While this may be the case, I also believe that Yahoo!'s top management did not think through the larger implications of hosting an e-mail service on computer servers inside China. I don't think they recognized at the time that by hosting user data inside China they would inevitably wind up where they are today - unless they were prepared to ask Chinese employees to commit what amounts to civil disobedience by refusing to hand over information about certain user accounts. Which could in turn result in those employees having their human rights violated...

At any rate, Congressman Lantos found the disorganization (incompetence) defense to be insufficient: "Either Yahoo! has little regard for providing full and complete information to a duly constituted committee of the Congress, or it has little regard for the issue of protecting human rights." He also said that a bipartisan investigation of Yahoo's testimony has led to the following conclusions:

Yahoo provided false information to Congress. Despite the sworn testimony before the Committee that Yahoo! did not know the nature of the investigation into the Shi Tao case, Yahoo! employees did know that the Chinese government wanted information related to Shi Tao because of a so-called “state secrets” investigation in order to imprison him.

When Mr. Callahan later discovered that he had provided false information, he did not make the slightest attempt, not the slightest attempt, to correct the information he had given to Congress under oath. Six months after his testimony, Mr. Callahan became aware that some officials of Yahoo! did know the nature of the investigation against Shi Tao at the time it complied with the Chinese request for information. Despite Mr. Callahan’s explicit recognition that his previous testimony was inconsistent with the facts, neither Mr. Callahan nor anybody at Yahoo contacted the Committee, orally or in writing, to advise us that Yahoo had provided false information to the Committee. Inexcusably, there was no effort whatsoever by Yahoo to set the record straight after providing false information to a duly constituted committee of Congress. Mr. Callahan did, however, tell his public relations operatives to spin the Shi Tao story in a different direction.

After discovering that its General Counsel had provided false information on this critical matter, Yahoo did not conduct an internal investigation into the circumstances under which false information was provided to Congress. Yahoo tried to sweep this grave transgression under the rug. No internal review of the matter took place. No change in company procedures was instituted.

Nobody at Yahoo has been disciplined for providing false information to Congress. Key employees related to the provision of false information to Congress remain at their posts.

Yahoo had no means or, possibly, intent, to prevent Yahoo! China from being a willing participant in political witch-hunts emanating from Beijing. Yahoo! Inc. had no American lawyers in Beijing. There was no mechanism in place for Yahoo headquarters to review Chinese efforts to ferret out individuals who wish to see a more open and democratic China.

A company of Yahoo!’s resources and sophistication operating in the Chinese milieu should have taken every conceivable step to prevent the automatic compliance with a request from the Chinese police apparatus. And to this day, Yahoo! has failed to change any of its practices in order to prevent such collaboration in the future. Yahoo! Inc. is now a minority shareholder in Yahoo! China. But one of our witnesses today -- CEO Jerry Yang -- sits on the Board of Alibaba, the parent company of Yahoo! China. If Chinese police today requested information from Yahoo! China related to a political dissident, Yahoo! China would turn over the individual’s email records and identity, who might be subsequently sent to prison, perhaps for ten long years.

Click here to read Jerry Yang's post titled "The Challenge of Engagement" on the Yahoo corporate blog. Some of the comments are quite harsh, though a few are sympathetic.

Declan McCullagh's live blog of the event on CNet included some observations not seen much in mainstream media coverage of the story.

He muses: "I wonder if Lantos and other Patriot Act supporters will apologize to Americans like Brandon Mayfield (falsely jailed under the Patriot Act) or Sami al-Hussayen (a Webmaster who provided hyperlinks to Muslim sites and was prosecuted under the Patriot Act)."

And: "I wish Lantos was as enthusiastic about free speech and privacy for Americans as he is for Chinese citizens, but his record on those topics isn't great."

A few more mid-hearing asides:

"Update 11:10am ET: Keep in mind the background here: Many politicians simply detest China not for reasons relevant here (a brutal thuggish regime) but for unrelated ones (cheap products and its currency peg to the U.S. dollar). Others, like Smith, a Roman Catholic, are fiercely anti-China because of its persecution of religious minorities. In other words, Yahoo is being used as a convenient way to attack China for unrelated reasons."
...

Update: 12:37pm ET: What's a little odd is that these politicians' complaints against China are true. China ranks in the bottom 10, below Somalia and just above Burma, of Reporters Without Borders' 2007 press freedom index. The odd part is that, because the committee members can't exactly get China's state security folks to show up, Yahoo is being held responsible by proxy for the content and operation of these laws. This should be a lesson to U.S.-based Internet companies: geography still matters. Be very careful when physically placing servers in an a country like China.
...

Update 1:32pm ET: It's over, with one last speech from Lantos targeting Yahoo, but not the Communist government of China, for creating "enormous damage" to the families of those who are imprisoned.

According to the Wall Street Journal account, Yang and Callahan were also asked to endorse the Global Online Freedom Act, which they said they would take another look at. I've written about why I think that proposed legislation is misguided: it is constructed as if the U.S. were immune to abuses of free speech and privacy. It also places power to decide about what constitutes legit surveillance and censorship - and what constitutes illegitimate surveillance and censorship in the hands of such esteemed bodies as the U.S. Department of Justice, known lately for its high tolerance of torture. Enough said.

I am still hoping that the global code of conduct which Yahoo!, Google, Microsoft, Vodaphone, and other companies are working on with human rights groups, socially responsible investment funds and academic institutions will ultimately do more to help companies avoid becoming vehicles for rights abuses by any and all governments. But as the EFF's Danny O'Brien pointed out to the Wall Street Journal, the process has been slow going lately. There are not easy, black-and-white solutions to many of the problems, unfortunately, unless you believe in total disengagement.

Comments

If coporations that take on Christian notion like "obey the
law of the land" and cooperate with local government on crimial
investigations required by law are "Moral Pygmies" -

- then what are the corporations that help a regime to subvert the
nation's constitution, help wage a war based on lies, and marterially support the brutal
occupation of another country? Killing innocent civilians under the regime's approval and protection?

Congress would have more moral authority on this issue if it first secured the electronic privacy rights of Americans before excoriating U.S. Internet companies operating in China.

That said, Yahoo! has made a number of errors in this case for which Congress rightly should hold them to account. Yahoo's good intentions and reputation would be furthered if it made clear and substantial efforts to help the families of the imprisoned dissidents through a financial settlement and a public commitment to advocate for their immediate release. Additionally, it would be reassuring to users and investors if Yahoo! would begin implementing internal changes that would demonstrate its commitment to a global Code of Conduct for Internet Freedom and Privacy, even if one has not yet been agreed among all the participants of the initiative.

The ethical dilemmas of American companies operating or investing in China are extremely complex. On a day that Yahoo's stock dropped substantially because of the House hearing, the share price of its Chinese investment, AliBaba, where Jerry Yang sits on the board, is soaring. Does this indicate that global investors do not hold Chinese companies to the same ethical standards as U.S. companies?

I'm studying this particular case for one of my undergraduate subjects, Corporate Ethics. Apparently, after researching and studying, my group mates have found that Yahoo! e-mail's Terms and Conditions now include statements that would protect them from future recurrences, Quoted below:

You agree to not use the Service to: 1. upload, post, email, transmit or otherwise make available any Content that is unlawful, harmful, threatening, abusive, harassing, tortious, defamatory, vulgar, obscene, libelous, invasive of another's privacy, hateful, or racially, ethnically or otherwise objectionable;